Hi sir, i am employee and age 39.
I have 1. Home loan 62 L, tenure 240 months EMIs and 50k emi just stared from May-2025 and 2.home loan 11.8L, tenure 84 months EMIs and 19k emi.
My monthly income in hand 1.06k. My PPF having 1L, Sukanya Samurdhi 2.2L, NPS having 21.8 L, SIP started with 10k per month from Aug-24 and equity having 1.5L.
Family property received 10 acre dry land and 1 L per annum is coming.
And i purchased 3 plots with 33L now worth 75L with earlier savings and PL i.e. all before 2017.
Tel me better management of loans and savings. My retirement is April-2046, my son 7th class and daughter 1st class.
Ans: You are managing multiple loans and investments. Now let's work on a complete 360-degree solution for better financial management.
Understanding Your Current Financial Situation
– You are 39 years old with retirement in April 2046.
– You earn Rs 1.06 lakh monthly, which is a decent income.
– Your home loan is Rs 62 lakh with Rs 50,000 EMI for 20 years.
– You also have another home loan of Rs 11.8 lakh with Rs 19,000 EMI for 7 years.
– Your total EMI burden is Rs 69,000 monthly.
– PPF balance is Rs 1 lakh and Sukanya Samriddhi is Rs 2.2 lakh.
– You have Rs 21.8 lakh in NPS.
– Equity investments are around Rs 1.5 lakh.
– A SIP of Rs 10,000 started recently, which is a good step.
– You receive Rs 1 lakh yearly income from dry land.
– You also hold 3 plots now valued at Rs 75 lakh.
Your family consists of your spouse, son in 7th class, and daughter in 1st class.
Assessing Your Current Cash Flow
– Total EMI is Rs 69,000 out of Rs 1.06 lakh income.
– This leaves you with only around Rs 37,000 for all other expenses.
If your monthly expenses are higher, your savings will suffer.
So, your loans are eating a big part of your income now.
Analysing the Home Loans in Detail
Home Loan 1: Rs 62 Lakh, 240 Months
– EMI started in May 2025, EMI is Rs 50,000.
– This is a long-term loan, so interest outgo is large.
Home Loan 2: Rs 11.8 Lakh, 84 Months
– EMI is Rs 19,000, with 7-year tenure.
– This is a smaller and shorter loan.
Which Loan to Prepay First?
– Always prepay the small loan first.
– Prepay the Rs 11.8 lakh loan faster.
– This will free up Rs 19,000 EMI within 3 to 4 years.
– After clearing it, you can focus on the bigger loan.
Managing Investments and Loans Simultaneously
Don’t stop all your investments to pay loans.
But also don’t invest heavily while loans are pending.
Split your surplus cash wisely:
– Use part of your dry land income to prepay the small home loan.
– Use any yearly bonuses and incentives for loan prepayment.
– Don’t use equity or PPF for loan repayment now.
Your SIP of Rs 10,000 should continue.
This builds wealth for long-term goals.
Building Your Emergency Fund First
Before prepaying loans, build an emergency fund.
Keep at least 6 months of household expenses.
Park this in a liquid mutual fund or sweep-in FD.
This gives financial protection during job loss or medical issues.
Reviewing Your Insurance Cover
Check if you have pure term life insurance.
If not, buy it immediately for Rs 75 lakh to Rs 1 crore.
This will protect your family during your loan tenure.
Don’t mix insurance with investments like ULIPs.
Buy health insurance for the full family if not done yet.
Managing Existing Investments Wisely
– PPF and Sukanya are for long-term goals. Continue them yearly.
– NPS will support your retirement. Don't withdraw it early.
– Equity holding is small. Don't sell it now. Let it grow.
Your SIP of Rs 10,000 is a good start.
Keep increasing it by 10% every year.
Don’t stop mutual fund SIPs while paying loans.
You need both loan clearance and wealth creation together.
Avoiding Real Estate as an Investment
Your 3 plots have grown in value from Rs 33 lakh to Rs 75 lakh.
But plots don’t give regular income.
If you plan to use them for selling later, it is fine.
But don’t buy new plots for investment.
Real estate is illiquid and takes time to sell.
Also, managing dry land is not a consistent income source.
Future savings should focus on mutual funds, not plots or land.
Making Use of Dry Land Income
The Rs 1 lakh yearly income from land is helpful.
Use this income as below:
– 50% towards emergency fund and loan prepayment.
– 50% towards child’s future or your SIP top-up.
This way your passive income is also working for your goals.
Children’s Education Planning
Your son is in 7th class. Daughter in 1st class.
Their higher education will cost more in 7 to 10 years.
Start separate SIPs for their college education.
Allocate at least Rs 5,000 to Rs 7,500 for each child’s goal.
Mutual funds help beat inflation over the long term.
Don’t rely on Sukanya Samriddhi alone for your daughter.
It is safe but offers lower growth compared to equity mutual funds.
Retirement Planning Perspective
Your retirement is 21 years away in 2046.
NPS corpus is building well. Continue regular contributions.
Along with NPS, grow your equity mutual fund investments.
They will give higher growth in your working years.
Later, shift to balanced funds closer to retirement.
Cash Flow Management Month by Month
Your cash flow is tight due to high EMIs.
Try this plan:
– Household and lifestyle expenses: Rs 30,000 to Rs 35,000.
– EMIs: Rs 69,000.
– SIPs: Rs 10,000.
– Emergency fund build-up: Rs 2,000 to Rs 5,000.
If expenses exceed this, cut down on lifestyle spends.
Postpone luxury buys and vacations for 3 to 4 years.
Suggested Loan Prepayment Strategy Timeline
Year 1 to 4:
– Build emergency fund first.
– Prepay the small home loan slowly.
– Try to clear the Rs 11.8 lakh loan in 4 years.
Year 5 onwards:
– Focus on the Rs 62 lakh loan.
– Increase prepayment using the freed Rs 19,000 EMI.
– Target to close it in 10 to 12 years instead of 20.
This reduces your debt burden before retirement.
Should You Sell the Plots?
Don’t sell them immediately unless facing a cash crunch.
Plots have appreciated well and may grow further.
But if your cash flow becomes very tight, sell one plot.
Use the sale proceeds to clear the bigger home loan partly.
Selling plots reduces your interest burden faster.
Discuss this step with a Certified Financial Planner before selling.
Future Financial Milestones to Focus On
– Build Rs 5 lakh emergency fund in 3 years.
– Clear the small home loan in 4 years.
– Increase your SIPs gradually to Rs 20,000 monthly.
– Build your children's higher education fund in 10 years.
– Clear the big home loan 5 years before retirement.
– Build a retirement corpus to cover 25 to 30 years post-retirement.
Why You Shouldn’t Pause SIPs for Loans
Some people pause SIPs to repay loans fast.
This is wrong because they lose long-term compounding.
Keep your SIPs running while prepaying loans side by side.
This balance builds both wealth and peace of mind.
Avoid Index Funds and Direct Funds
Don’t choose index funds.
– Index funds blindly follow the market.
– They don’t protect you in market crashes.
– Actively managed funds give better long-term results.
Also, avoid direct mutual funds.
– Direct funds give no expert guidance.
– You will be confused during market falls.
Instead, invest in regular funds through an MFD holding CFP credential.
They provide handholding, monitoring, and rebalancing.
This is very important for a working family man like you.
Keeping a Long-Term View
Don’t get stressed by your present EMI load.
In 3 to 5 years, your cash flow will ease.
Your children’s education, your retirement, and a debt-free life are achievable.
Stay disciplined and avoid distractions like real estate investments.
Finally
Your financial journey has good foundations already.
Two things need improvement now. First, your high loan burden. Second, consistent wealth creation.
Take these steps next:
– Focus first on clearing the small home loan in 4 years.
– Continue SIPs and grow them over time.
– Avoid any more real estate purchases.
– Use dry land income wisely for wealth building and debt clearing.
– Review your plan yearly with a Certified Financial Planner.
In the long term, you will achieve both debt freedom and wealth growth.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Varun on Oct 26, 2023Hindi
